In the last year, we saw mortgage rates hover around their record low levels but of late, it has been rising since the last few months, thereby increasing the average rate on a 30 year fixed rate mortgage to 4.35%. This has been recorded as the highest since 2014 April and much above the average percentage for the entire year, 3.65%. Financial analysts and economists predict that the mortgage rates will keep climbing higher even in the next year hence making 2017 a pretty challenging year for prospective homebuyers.
When it comes to soaring interest rates, you actually increase the cost which in turn challenges your budgets and the ability to qualify. There will be a reduction in the number of buyers who will be eager to buy homes. Rates on long-term mortgages tend to track the yield on 10 year US Treasury note and various moves make the rates on long-term mortgages tumble. So, what are the mortgage moves that you can take in 2017 to smoothly grab a loan without any hassle? Let’s check out some such strategies.
#1: You may make a small down payment or maybe none
Lenders believe that they often dispel the idea that homebuyers have to pay at least 20% of the loan amount as a down payment to get a loan. But some loan programs allow qualified people to purchase homes with no down payment at all. There are also loan programs that allow down payments which areas less than 3 to 3.5%. So, you needn’t worry about saving enough before taking out a home loan in 2017.
#2: FHA offers you loans even when you don’t have a stellar credit score
The Federal Housing Administration offers insurance on home loans and they are even appealing enough as they are given to borrowers with imperfect credit as well. Last year, in 2016, the average score for getting an FHA loan was 686 and the average homebuyer had a score of 753. You require making a down payment of at least 10% to obtain an FHA mortgage. But at first, you’ve got to find out a lender and get pre-approved for the loan.
#3: Now you can save by refinancing into a 15-year term mortgage
Though mortgage rates will rise in 2017, there will be still some homeowners who would find out a reason to refinance. People may opt for a refinance due to many reasons like divorce, finally owning some positive equity, recovering from a low score, cashing out equity, or saving enough of your dollars by refinancing to a short-term loan. Hence, 2017 is going to be a year when many homeowners will be interested in refinancing their loans into shorter terms to save money.
#4: Borrow only an amount that you can pay back
When people purchase homes, they often end up stretching their budget to make the initial monthly payments. They wish their income gets higher so that covering mortgage payments become easier. But always remember that it’s smart to live within your means and hence you should always take out a mortgage loan that is within your repayment ability. This will avoid cases of defaults.
So, now that you know what 2017 stores for you and the mortgage market, take immediate steps to get a loan. Don’t wait for the right time as that would increase the rates even more. Grab whatever opportunity you get now.
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